[Federal Register Volume 78, Number 213 (Monday, November 4, 2013)]
[Notices]
[Pages 65963-65970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-26266]
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DEPARTMENT OF COMMERCE
International Trade Administration
Antidumping Proceedings: Announcement of Change in Department
Practice for Respondent Selection in Antidumping Duty Proceedings and
Conditional Review of the Nonmarket Economy Entity in NME Antidumping
Duty Proceedings
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Change in Practice to the Department's Respondent Selection in
Certain Antidumping Duty Proceedings and Elimination of Conditional
Review of the NME Entity.
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SUMMARY: The Department of Commerce (``Department'') is hereby refining
its practice with respect to the methodology for respondent selection
in certain antidumping (``AD'') proceedings. Specifically, the
Department is making changes to its current practice in antidumping
administrative reviews for (1) respondent selection; and (2)
conditional review of the NME entity. Normally, the Department makes
these
[[Page 65964]]
types of changes to its practice in the context of its case
proceedings, on a case-by-case basis.\1\ For these particular changes
in practice, the Department sought comments in advance of making
changes in practice. However, the Department expects to continue to
consider, and make changes in practice, as necessary, in the context of
its proceedings based upon comments from interested parties submitted
in the course of such proceedings.\2\
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\1\ In the context of its proceedings, Commerce is entitled to
change its practice and adopt a new administrative practice provided
it explains the basis for the change, and the change is a reasonable
interpretation of the statute. Saha Thai Steel Pipe Company v.
United States, 635 F.3d 1335, 1341 (2011).
\2\ In particular, under 19 U.S.C. 1677f-1(b), the authority to
select ``statistically valid samples rests exclusively with the
administering authority.'' Commerce must retain the ability to alter
its sampling methodology in each case, as is clear from the above
provision that Commerce ``shall, to the greatest extent possible,
consult with the exporters and producers regarding the method to be
used to select exporters, producers, or types of products under this
section.''
DATES: Applicability date: The Department expects to apply these
changes in practice in AD administrative reviews for which the notice
of opportunity to request an administrative review is published on or
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after December 4, 2013.
FOR FURTHER INFORMATION CONTACT: Shauna Biby, International Trade
Analyst, Import Administration, U.S. Department of Commerce, at 202-
482-4267.
SUPPLEMENTARY INFORMATION: The Department is hereby refining its
practice with respect to the methodology for respondent selection in
certain AD proceedings. Specifically, the Department intends to select
respondents by sampling where certain criteria are met in AD
administrative reviews. Further, while considering issues related to
respondent selection and sampling, the Department has also reconsidered
its practice of ``conditionally'' reviewing the nonmarket economy
(``NME'') entity. In an administrative review of an AD order, the
Department's current practice is to consider the NME entity to be
``conditionally'' under review. This means that even absent a request
for review of the entity, the entity will become subject to review if
an exporter subject to the review does not demonstrate that it is
separate from the entity, and the entity's entries will be potentially
subject to a new cash deposit and assessment rate. The Department has
determined to discontinue such conditional reviews. If interested
parties wish to request a review of the entity, such a request must be
made in accordance with the Department's regulations.
The Department notes that in June 2005, it requested and received
comments on the timing of assessment instructions for AD orders
involving NME cases.\3\ Many commenters expressed support for a
practice that would not delay assessment instructions of certain
entries based on the Department's conditional review of the NME
entity.\4\ Although the Department did not revise its practice with
respect to conditional review of the NME entity at that time, the
Department's experience to date indicates that there is no ongoing
benefit to be achieved in maintaining conditional review of the entity.
Furthermore, by eliminating the practice of conditional review, the
Department eliminates an unnecessary delay in liquidation.
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\3\ See Timing of Assessment Instructions for Antidumping Duty
Orders Involving Non-Market Economy Countries, 70 FR 35634 (June 21,
2005).
\4\ See public comments received July 15, 2005, available at
http://ia.ita.doc.gov/download/nme-assessment/nme-assessment-timing.html.
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The notice-and-comment requirements of the Administrative
Procedures Act do not apply to interpretive rules, general statements
of policy or procedure, or practice. 5 U.S.C. 553(b)(3)(A). Although
the notice-and-comment requirements of the Administrative Procedure Act
do not apply, the Department provided an opportunity for the public to
comment on the Department's proposed refinement to respondent selection
in a notice published on December 16, 2010; and for the public to
comment on the Department's practice with respect to the timing of
assessment instructions in NME cases in a notice published on June 21,
2005.
Sampling Methodology
Background
On December 16, 2010, the Department proposed a refinement to its
practice regarding its methodology for respondent selection in AD
proceedings.\5\ As explained in the Proposed Methodology, when the
number of producers/exporters (``companies'') involved in an AD
investigation or review is so large that the Department finds it
impracticable to examine each company individually, the Department has
the statutory authority to limit its examination to: (1) A sample of
exporters, producers, or types of products that is statistically valid
based on the information available to the administering authority at
the time of selection, or (2) exporters and producers accounting for
the largest volume of subject merchandise from the exporting country
that can reasonably be examined.\6\ The Department has, to date,
generally used the second option in proceedings in which limited
examination has been necessary. One consequence of this is that
companies under investigation or review with relatively small import
volumes have effectively been excluded from individual examination.
Over time, this creates a potential enforcement concern in AD
administrative reviews because, as exporters accounting for smaller
volumes of subject merchandise become aware that they are effectively
excluded from individual examination by the Department's respondent
selection methodology, they may decide to lower their prices as they
recognize that their pricing behavior will not affect the AD rates
assigned to them. Sampling such companies under section 777A(c)(2)(A)
of the Tariff Act of 1930, as amended (the ``Act''), is one way to
address this enforcement concern.
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\5\ See Proposed Methodology for Respondent Selection in
Antidumping Proceedings; Request for Comment, 75 FR 78678 (December
16, 2010) (``Proposed Methodology'').
\6\ See sections 777A(c)(2)(A) and (B) of the Act.
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The statute requires that the sample be ``statistically valid.''
\7\ The Department has interpreted this as referring to the manner in
which the Department selects respondents.\8\ Therefore, to ensure the
statistical validity of samples, in the Proposed Methodology, the
Department proposed employing a sampling technique that: (1) Is random;
(2) is stratified; and (3) uses probability-proportional-to-size
(``PPS'') samples. Random selection ensures that every company has a
chance of being selected as a respondent and captures potential
variability across the population. Stratification by import volume
ensures the participation of companies with different ranges of import
volumes in the review, which is key to addressing the enforcement
concern identified above. Finally, PPS samples ensure that the
probability of a company being chosen as a respondent is proportional
to its share of imports in the respective stratum.
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\7\ See section 777A(c)(2)(A) of the Act.
\8\ See Brake Rotors From the People's Republic of China: Final
Results and Partial Rescission of the 2004/2005 Administrative
Review and Notice of Rescission of 2004/2005 New Shipper Review, 71
FR 66304 (November 14, 2006) and accompanying Issues and Decision
Memorandum at Comment 1A (``Brake Rotors'').
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The Department's Sampling Methodology
In general, the Department will normally rely on sampling for
[[Page 65965]]
respondent selection purposes in AD administrative reviews \9\ when the
following conditions are met: (1) There is a request by an interested
party for the use of sampling to select respondents; (2) the Department
has the resources to examine individually at least three companies for
the segment; (3) the largest three companies (or more if the Department
intends to select more than three respondents) by import volume of the
subject merchandise under review account for normally no more than 50
percent of total volume; and (4) information obtained by or provided to
the Department provides a reasonable basis to believe or suspect that
the average export prices and/or dumping margins for the largest
exporters differ from such information that would be associated with
the remaining exporters.\10\
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\9\ This sampling methodology has been developed for AD
administrative reviews, not AD investigations, or countervailing
duty investigations or reviews.
\10\ This information may include for example: (1) Company
margins from previous segments of the proceeding; (2) market and
company pricing information; (3) the nature and structure of the
foreign industry in question, including cost structure and/or actual
pricing data; and (4) the U.S. Customs and Border Protection import
entry database.
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Accuracy of the Sampling Method
Many of the commenters who oppose the proposed methodology focus on
the issue of accuracy, and query how a small sample can be
``statistically valid'' within the meaning of the statute. However, in
a previous proceeding, the Department explained that the phrase
``statistically valid'' in section 777A(c)(2)(A) of the Act refers to
the manner or process by which the sample is taken, not the sample
results.\11\ In that proceeding, the Department explained that ``the
phrase `statistically valid sample' was added to the statute in 1994
merely to conform the language of the statute with that of the World
Trade Organization (``WTO'') AD Agreement (Agreement on Implementation
of Article VI of the General Agreement on Tariffs and Trade 1994), and
is not different in substance from the phrase `generally recognized
sampling techniques' used in the Act prior to the URAA.'' \12\ The
Department determined that the ``statistical validity'' of the sample
``refers only to the manner in which the respondents are selected, and
not to the size of the sample under review.'' \13\
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\11\ See Brake Rotors, 77 FR 66304 and accompanying Issues and
Decision Memorandum at Comment 1A.
\12\ Id., (citing Statement of Administrative Action, H.R. Rep.
No. 103-316, at 872 (1994)).
\13\ Id.
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Statistical Validity of the Department's Sampling Method
The statistical tools in the methodology described herein satisfy
the requirements for statistical validity. The population average
(mean) dumping margin of concern to the Department is the export trade-
weighted average dumping margin across all firms (exporters under
review). Because this trade-weighted average margin, in turn, is
equivalent to the stratum-weighted average of the stratum means, the
estimation of the population mean equates to estimation of the stratum
means. Each stratum mean is estimated on the basis of a PPS-based
sample mean,\14\ which accounts for the variance in trade shares across
exporters in the stratum and is, therefore, an unbiased estimator of
the stratum mean in the sense that there is no systematic error
associated with repeated sampling. Without PPS sampling, the sample
mean would be over-weighted toward smaller-exporter margins and a bias
would result. PPS sampling removes this bias.
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\14\ The sample mean is the arithmetic average of the data
values in the sample. For a sample of ten numbers, the sample mean
is (x1 +x2. . . .)/10. In the AD respondent
sampling context, the sample mean for a stratum is the simple
average of the dumping margins of the sampled respondents from the
stratum.
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Finally, stratification of the sample population into appropriate
size categories, e.g., small, medium and large-sized exporters by
import volume, ensures a maximum degree of cross-sectional
representation of the population in the sample.
Definition of Sampling Population
Currently, the Department generally chooses companies for
individual examination based on import volumes reported in case-
specific U.S. Customs and Border Protection (``CBP'') import data. It
also assigns an AD rate to all other companies that are not selected
for individual examination. The Department currently does not require
any evidence of shipment from a non-selected company before making its
respondent-selection decision. However, in the sampling context, the
existence of shipments will be required in order to both define the
population, and if the company is selected, establish a dumping margin
for the company. Therefore, the Department will normally use CBP data
as the basis for the volume of subject merchandise and expects to
define the population from which to sample as all companies named in a
review with shipments of subject merchandise.
In NME cases, only those exporters who receive a separate rate will
be included in the sample population. Companies that do not receive a
separate rate will not be subject to review pursuant to the elimination
of the conditional review of the NME entity practice described below.
Therefore, in order to establish the appropriate sample population at
the time of the sampling selection, it is necessary for the Department
to make its determinations regarding the separate rate status of the
companies under review before the sample is determined. For the purpose
of constructing the sample rate, the Department expects that companies'
separate rate status will remain unchanged once the sample is
determined.
Calculating and Assigning Sample Rates
After examination of selected respondents by the sampling method,
the Department will need to assign a rate to all non-selected
companies. To do so, the Department will calculate a ``sample rate,''
based upon an average of the rates for the selected respondents,
weighted by the import share of their corresponding strata. The
respondents selected for individual examination through the sampling
process will receive their own rates; all companies in the sample
population who were not selected for individual examination will
receive the sample rate.
Implementation of Sampling Methodology
The Department expects to implement the sampling methodology in the
context of its administrative reviews by providing interested parties
with notice of the schedule for submissions related to sampling on a
case-by-case basis. The Department is publishing concurrently with this
notice a proposed rule to amend section 351.301 of its regulations,
``Time limits for submission of factual information,'' to implement
procedural changes, as needed, with respect to submissions related to
sampling in antidumping administrative reviews.
In sum, the rule proposes to require interested parties to submit
requests for the Department to conduct sampling in antidumping duty
administrative reviews together with their comments on CBP data within
seven days following the release of the CBP data, unless otherwise
specified. The rule proposes that the submission include: (1) A request
that the Department conduct sampling; and (2) factual
[[Page 65966]]
information \15\ and comments on whether this factual information
provides a reasonable basis to believe or suspect that the average
export prices and/or dumping margins for the largest exporters differ
from such information that would be associated with the remaining
exporters. Under the proposed rule, if an interested party were to
submit a request for the Department to conduct sampling, all other
interested parties will then have a ten-day comment period and a five-
day rebuttal period to comment on the sampling request.\16\
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\15\ A detailed description of what this information may include
is listed in footnote 10 under ``The Department's Sampling
Methodology'' section of this Federal Register notice.
\16\ In NME cases, parties must submit their separate rate
applications or certifications no later than 60 days after the
notices of initiation of the reviews are published, unless otherwise
specified in the notices of initiation.
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Apart from the proposed rule, in cases in which the Department
determines to sample for respondent selection, it expects to conduct
the sampling following the conclusion of the 90-day period for
withdrawal of requests for administrative reviews under 19 CFR
351.213(d)(1). In cases in which the Department decides to sample, the
Department does not expect to exercise its discretion to extend the 90-
day period for withdrawal of review requests.
Comments and Responses
The Department received 18 comments on the proposed use of sampling
for selecting mandatory respondents. A summary of these comments are
presented below and have been grouped by the issues raised in the
submissions. The Department's response follows immediately after each
comment.
Issue: Statutory and International Requirements, Including That of
``Statistical Validity''
Some commenters generally support the increased use of sampling,
with several commenters noting that the proposed methodology is
consistent with statutory requirements. Citing the Statement of
Administrative Action (``SAA'') and previous instances in which the
Department has sampled, several commenters note that the Department is
only required to use a methodology ``designed to give representative
results based on the facts known at the time of sampling.'' Further,
the Department must contend with limited time and resources and has the
discretion under the law to devise an appropriate sampling methodology.
Other commenters note that the Department should retain as much
flexibility as possible, and should not confine itself to one sampling
methodology for all cases and industries.
Other commenters raised a number of concerns with whether the
proposed methodology meets the Department's statutory and international
obligations. Further, these commenters generally questioned whether the
proposed methodology is ``statistically valid,'' arguing that the
Department must make some finding about the degree of precision it will
require. Specifically, there is no reference to size or ``precision''
of the sample in the proposed methodology. Some commenters asserted
that a ``statistically valid sample'' is a higher standard than a
``generally recognized sampling technique.'' Moreover, ``statistically
valid'' must ``include the key ideas of the size of the sample and the
relationship of the sample to the whole.'' The core problem, some
commenters noted, is that, in most cases, the Department does not have
the resources to investigate the large number of companies that would
be required to make the sample statistically valid. These commenters
generally note that sample size cannot be fixed at the start, but
rather one determines sample size based on three factors: the number of
companies whose behavior is being measured, the margin of error likely
to result, and finally, the ``confidence'' level desired.\17\ These
commenters assert that 90 or 95 percent is a typical confidence level.
In sum, sample size must be large enough to permit a statistically
valid inference. The statute therefore provides an alternative: Choose
the largest exporters. This method, the commenters assert, will
normally yield the most accurate and comprehensive results.
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\17\ ``Confidence level'' relates to the probability that a
sample-based estimate falls within specified error limits of the
estimated parameter value, and the range of values defined by an
estimate plus or minus the specified error limit is a ``confidence
interval.''
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With respect to the Department's international obligations, one
commenter submitted that any respondent selection practice must comply
with the Antidumping Agreement (``ADA'') Article 9.3, under which a
company's margin is linked to its behavior, stating further that the
proposed sampling methodology lacks any such link. Further, the
selection process must not produce results that deprive respondents of
the right to revocation under Articles 11.1 and 11.3 of the ADA.
Companies not selected as mandatory respondent have no opportunity to
assert these rights.
The Department's response: The Department addresses the majority of
these issues herein and otherwise will address any particular
circumstances as they arise on a case-by-case basis. Specifically, the
statute requires that the sample be ``statistically valid.'' The
Department has interpreted this as referring to the manner in which the
Department selects respondents and not to the size of the sample or
precision of the sample results. Therefore, to ensure the statistical
validity of samples, the Department will employ a sampling technique
that: (1) Is random; (2) is stratified; and (3) uses PPS samples.
Random selection ensures that every company has a chance of being
selected as a respondent and captures potential variability across the
population. Stratification by import volume ensures the participation
of companies with different ranges of import volumes in the review,
which is key to addressing the enforcement concerns identified herein.
Finally, PPS samples ensure that the probability of a company being
chosen as a respondent is proportional to its share of imports in the
respective stratum. The Department intends to address any further
comments on the statistical validity of its sampling methodology on a
case-by-case basis as they arise. Finally, the Department will address
any specific concerns with respect to revocation as they arise on a
case-by-case basis.
Issue: Clarifying the Rationale for Increased Use of Sampling
Several commenters asserted that the Department failed to define
the objective of its sampling proposal nor had it described or
explained what benefits it perceives from sampling, for example, how
sampling would advance any statutory or policy objective. Noting
resource constraints, one commenter urged the Department to recall its
authority under the Act to simplify and streamline procedures,
including the use of averaging and statistically valid samples.
Further, these commenters generally asserted that the Department should
maintain its preference for selecting the largest exporters based on
volume, which will result in ``dumping margins that more accurately
reflect the pricing of subject merchandise in the U.S.''
The Department's response: As noted herein, the Department has, to
date, generally chosen the largest respondents in proceedings in which
limited examination has been necessary. One consequence of this is that
companies under review with relatively small
[[Page 65967]]
import volumes have generally been effectively excluded from individual
examination. This creates a potential enforcement concern in AD
administrative reviews because, as exporters accounting for smaller
volumes of subject merchandise become aware that they are effectively
excluded from individual examination by the Department's respondent
selection methodology, they may decide to lower their prices as they
recognize that their pricing behavior will not impact the AD rates
assigned to them. Sampling companies under section 777A(c)(2)(A) of the
Act is one way to remedy this enforcement concern. Therefore, the
Department is exercising its discretion to use sampling in its
respondent selection procedures.
Issue: The Use of CBP Data and Other Issues Regarding Import Shares for
Purposes of Defining the Sample Population
Several commenters also raised issues regarding the use of CBP
data. These comments generally focused on those instances where CBP
data may be problematic due to, for example, fraud, miscalculations, or
multiple affiliations of sellers and resellers. Some commenters urged
the Department to consider greater use of quantity and value (``Q&V'')
questionnaires, while others also recognized that Q&V questionnaires
are time-consuming and will probably lead the Department to an
incomplete picture of the industry, especially in large industries.
Some commenters argued that the Department should exclude producers
with statistically insignificant export volumes (for example, less than
two percent). Such companies' sales may not be bona fide sales, and
selecting such companies may result in a skewed sample. These companies
should be excluded from the sample pool while still assigning them the
sample rate from that review. One commenter further recommended
establishing a rebuttable presumption that entries accounting for less
than one percent of the import volume are not bona fide sales.
The Department's response: For the reasons explained herein, the
Department intends to follow its current practice of relying upon CBP
data. Consistent with that practice, the Department will consider any
specific problems or issues identified concerning the reliability of
CBP data on a case-by-case basis. The Department recognizes that the
use of Q&V questionnaires is time-consuming and not always necessary
and therefore intends to use them only where warranted, such as AD
investigations in non-market economy countries.
With respect to the proposal to exclude producers based on low
export volumes, at this time, the Department does not intend to
implement a general rule to exclude any respondents based on sales
volumes, especially in light of utilizing the PPS methodology, which
ensures that any single respondent is not over-represented in the
sample population, as implementing such a singular approach would be
inappropriate in many cases. But, the Department will consider comments
raised by interested parties on a case-by-case basis and make
determinations based upon the facts and circumstances in each case. The
Department will consider all information and allegations regarding
specific CBP data and other sales volume issues on a case-by-case
basis.
Issue: Stratification
Commenters questioned whether the Department should forgo
stratification, define the strata based on different criteria than
proposed, as well as consider defining the population (and probability
of selection) by production, by import volume rather value, and by
whether the respondents requested a review or whether respondents were
named in a request for a review. One commenter argued that the
Department has no factual basis for using size as a basis for
stratification, which ``must be based on some relationship between the
criteria used or the strata and the variable being measured.'' If the
Department wishes to stratify, it must base strata on variables
relevant to margins. One commenter proposed bifurcating the population
into two groups: (1) Those respondents who requested a review of their
own entries; and (2) respondents requested by the domestic parties.
Under this novel methodology, the Department would stratify and sample
the two populations separately, and assign rates to individual strata.
The Department's response: The Department intends to stratify on
the basis of volume, as this best meets the policy intentions described
above; namely, creating the potential for individual examination for
some of those respondents under review that otherwise would not
normally be selected. Where circumstances warrant, especially in light
of the enforcement concerns described herein, the Department may
consider other characteristics by which to stratify on a case-by-case
basis.
Issue: Whether the Department Should Limit Sampling to Reviews
The Department also received comments regarding the use of sampling
in investigations as well as whether sampling should be the ``default''
method for respondent selection. At least one commenter argued that the
Department should use sampling as the ``default'' procedure for
respondent selection in administrative reviews. However, given the
complexities and short time frames of investigations, the commenter
recommends that the Department should establish deadlines under which
petitioners must request sampling in investigations, with ``selecting
the largest'' as the default procedure in investigations. Other
commenters suggest only allowing sampling in investigations when doing
so is requested in the petition. Another group of comments recommended
that choosing the largest should remain the Department's ``default''
procedure for respondent selection, given the issues to which sampling
gives rise. Many commenters urged the Department to retain its
discretion in choosing its respondent selection methodology as the
facts warrant.
The Department's position: Section 777A(c)(2)(A) of the Act
provides the Department with authority to employ samples in both AD
investigations and administrative reviews. The methodology described
herein, however, was developed for purposes of administrative reviews.
In large part, the enforcement concerns raised herein are not as
salient in the case of investigations, where there has been no previous
expectation of participating in (or being excluded from) a proceeding.
Accordingly, the Department intends to consider sampling when the
criteria described above are met in administrative reviews. Requests
for sampling in investigations, for example, may give rise to other
concerns that the Department has not yet considered. Therefore, the
Department will address other requests for sampling as they arise in
specific proceedings.
Issue: Whether the Department Should Reconsider Certain Aspects of the
Proposed Methodology
The Department also received comments on the methodology itself,
with some commenters arguing that the Department should retain the
discretion to sample when selecting only two respondents, and other
commenters arguing that three respondents is insufficient to meet the
statutory requirements with respect to sampling. Further, the
Department also received
[[Page 65968]]
comments on the initially proposed 75 percent threshold, i.e., the
percentage of imports represented by the largest respondents.
One commenter noted that the Department should use this limitation
(i.e., the threshold) when sampling in investigations, but not in
reviews, since this will not address the issues sampling is intended to
remedy in industries dominated by a few large exporters. Another
commenter noted that the Department has not articulated any rational
basis to reject the greater coverage of 75 percent in favor of the
lower percentage of imports likely to be covered by a sample. Rather,
the Department should be required to individually examine a number of
respondents proportional to the number of respondents in the
population.
The Department's response: For the reasons described in greater
detail earlier in the preamble and for purposes of this notice, the
Department has determined to consider sampling when it can select a
minimum of three respondents to examine individually and when the three
largest respondents (or more if the Department intends to select more
than three respondents) by import volume of the subject merchandise
under review account for normally no more than 50 percent of total
volume. The Department considers 50 percent to be a reasonable
threshold because in these circumstances the agency would be able to
calculate specific dumping margins for the majority of imports during a
period of review. However, when selecting the largest respondents does
not allow the Department to calculate dumping margins for the majority
of imports, and the Department has the resources to review at least
three respondents, the Department may choose to sample in view of the
enforcement concerns discussed herein.
Issue: Respondent Characteristics
Several commenters noted that the Department should clarify what
information it will consider with respect to variations in the
population. Further, while the proposed methodology does acknowledge
that significant differences in the population may affect the decision
to sample, it does not address how the Department will assess these
differences. In this vein, another commenter contended that the
comments the Department receives in the proposed 10-day deadline should
be used by the Department not only to determine whether to sample, but
also how to sample. Several commenters warned against relying on the
information presented in the comments as the basis to avoid sampling.
The Department's response: In general, the Department may consider
sampling for respondent selection purposes in AD administrative reviews
when (among other conditions) information obtained by or submitted to
the Department provides a reasonable basis to believe or suspect that
the average export prices and/or dumping margins for the largest
exporters differ from such information that would be associated with
the remaining exporters. Such a fact pattern supports the existence of
potentially significant enforcement concerns, as variation in the
dumping behavior of the population gives rise to concerns that a non-
random means of respondent selection may systematically exclude certain
dumping behavior. The Department has identified several types of
information that a party may submit, including: Company margins from
previous segments of the proceeding; market and company pricing
information; the nature and structure of the foreign industry in
question, including cost structure and/or actual pricing data; and the
U.S. Customs and Border Protection import entry database. The
Department may consider other information on a case-by-case basis.
Issue: Timing
Several commenters contended that the Department should clarify
that the clock for the 10-day comment period should start running when
parties have all the information necessary to submit comments (i.e.,
after the deadline for seeking separate-rate status, no-shipment
status, Q&V/CBP data is complete, etc.). The same commenters proposed
establishing a 40-day deadline for submitting and clarifying no-
shipment and separate-rate information, with a 10-day comment period
following that.
One commenter proposed waiting to sample until the window for
withdrawing review requests has expired (currently 90 days from
initiation), while another commenter proposed amending 19 CFR
351.213(d)(1) to be 60 days from initiation or 15 days following the
deadline for filing. However, these commenters also noted that the
Department should retain discretion to adjust this deadline on a case-
by-case basis, keeping the deadline at 90 days for cases where sampling
is not employed.
The Department's response: The Department expects to clarify many
of these timing issues by giving interested parties notice of the
procedural requirements during the course of the particular proceeding,
and will address any concerns as they arise on a case-by-case basis. In
addition, the Department is promulgating an amendment to section
351.301 of its regulations to address procedures for submissions
related to sampling in administrative reviews. With respect to
withdrawal of review requests and its potential impact on the timing of
sampling, in cases where the Department determines to employ sampling
for respondent selection, it will conduct its sampling following the
conclusion of the 90-day period for withdrawal of requests for
administrative reviews under 19 CFR 351.213(d)(1). In cases where the
Department decides to sample, the Department expects that it will not
exercise its discretion to extend the 90-day period for withdrawal of
review requests. In this way, the Department preserves the ability of
firms to withdraw their review requests during the first 90 days of the
review as required by section 351.213(d)(1) of its regulations, but
also ensures that later withdrawals do not adversely impact the
Department's ability to conduct its sampling in a timely manner given
the time constraints for completion of administrative reviews.
Issue: Rate Assignment
One commenter maintained that the Department should assign each
stratum's rate to the members of that stratum and should not average
the rates together to calculate and assign a population-wide average
rate; each stratum's rate is predictive of the behavior of members of
that stratum, and averaging the rates together does not yield
representative results for any member of the population.
The Department received a range of comments regarding the inclusion
of adverse facts available (``AFA''), de minimis and zero rates in the
sample rate, including that: (1) The Department should include all AFA,
zero, and de minimis margins in the sample rate; (2) the Department
should include AFA rates and exclude de minimis/zero rates; and (3) the
Department should exclude all total AFA, zero, and de minimis margins,
but should include margins based on partial AFA in the sample rate.
Several commenters submitted that the Department should use the
weighted average of all calculated rates where there is at least one
rate not based on AFA. Recognizing that there is no statutory directive
when no calculated rates are available, this commenter noted that Court
of International Trade and WTO precedent require the Department to
``consider the
[[Page 65969]]
significance'' of zero and de minimis rates. However, these commenters
and others further argued that international obligations are
unambiguous with respect to this issue: AFA cannot be included in all-
other or sample rates. Article 6.8 and Annex II list limited situations
in which AFA may be applied, and that is only when a party does not
cooperate.
The Department's response: As noted above, the aim of the sampling
methodology is to obtain the population average (mean) dumping margin
which is the trade-weighted average dumping margin across all firms
under review. The Department considered the approaches suggested by the
commenters, but found that the methodology described herein remains the
most appropriate approach. The Department intends, however, to address
any comments on how to assign rates on a case-by-case basis as they
arise within a particular proceeding. Thus, in assigning all non-
selected companies a rate, the Department will calculate a ``sample
rate,'' based upon an average of the rates for all selected
respondents, weighted by the import share of their corresponding
strata. In line with the Department's practice heretofore, the
Department will include all rates in the sample. Therefore, consistent
with the statute, the Department will assign one rate to all
respondents in the sample population that were not individually
examined. The Department will address any further issues as they relate
to the facts of specific proceedings on a case-by-case basis.
Issue: Replacement Respondents and the Use of Voluntary Respondents
Several commenters noted that the Department should address the
potential need to replace a respondent. In such an event, one commenter
suggested, the Department could rank all respondents in each stratum,
and simply go down the list to replace a respondent. Alternatively, the
Department can ``re-run'' the selection within that stratum. One
commenter warned against ``re-shuffling'' the strata after a
withdrawal, noting that the sample methodology need only be based on
the facts known to the Department at the time of selection. Another
commenter asserted that replacement of a respondent must be achieved
through the PPS selection methodology in the affected stratum,
``otherwise the sample will be skewed and any pretense of statistical
validity will be further undermined.'' It was also noted that, if the
Department waits to sample until the population is set (after
withdrawals and separate-rate applications), the issue of whether to
replace respondents should not regularly occur. One commenter stated
that inclusion of smaller companies increases the likelihood of non-
cooperation and that the Department must increase the number of
companies sampled in order to accommodate this eventuality. A number of
commenters requested that the Department provide explicit guidelines
for its selection of one or more additional mandatory respondents where
a company initially selected does not cooperate.
With respect to voluntary respondents, several commenters contended
that the Department should not alter its current voluntary respondent
practice. Further, voluntary respondents should receive their own rates
and those rates should not be used in the weighted average rate. At
least one commenter contended that the Department should not allow for
voluntary respondents when sampling, but stated that if any voluntary
respondents are examined, those rates should not be included in the
sample rate.
A number of commenters submitted that increasing opportunities for
voluntary respondents provides a means to meet the Department's legal
obligations, and that the Department's current policy of examining no
voluntary responses whenever it has determined to limit the number of
respondents ignores its own statute and international obligations. In
general, these commenters urge the Department to encourage voluntary
participation and be liberal in accepting voluntary respondents.
The Department's response: Prior to selecting its sample, the
Department intends to establish the population from which to draw its
sample by first accounting for withdrawals of requests for review and
also the separate-rate status of respondents in NME cases. However, the
exact replacement procedure, when replacement is considered, as well as
whether the Department will accept any specific requests for
individual-examination by voluntary respondents, will depend, as it
must, on the facts of the specific case. In addition, the Department
finds the comments, such as the impact of company size on the sample,
to be speculative at this point, but will consider such comments raised
by interested parties in the course of its proceedings on a case-by-
case basis.
Review of the NME Entity
Background
While considering the many issues involved in sampling in
administrative reviews, the Department determined that one of the
issues that may impact the use of sampling in future segments is the
Department's review of the NME entity in its administrative reviews.
Specifically, in proceedings involving NME countries, the Department
has a rebuttable presumption that the export activities of all
companies within the country are subject to government control and,
thus, imports from all companies should be assessed a single AD rate
(i.e., the NME-entity rate).\18\ It is the Department's practice to
assign this single rate to all exporters of merchandise in an NME
country subject to an AD investigation or review unless an exporter can
demonstrate that it is sufficiently independent in its export
activities, on both a de jure and de facto basis, so as to be entitled
to a ``separate rate'' (i.e., a dumping margin separate from the margin
assigned to the NME entity). The Department analyzes each entity
exporting the subject merchandise that applies for a separate rate
under a test first articulated in Sparklers,\19\ and further developed
in Silicon Carbide.\20\
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\18\ See 19 CFR 351.107(d) (providing that ``in an antidumping
proceeding involving imports from a nonmarket economy country,
`rates' may consist of a single dumping margin applicable to all
exporters and producers'').
\19\ See Final Determination of Sales at Less Than Fair Value:
Sparklers from the People's Republic of China, 56 FR 20588 (May 6,
1991) (``Sparklers'').
\20\ See Final Determination of Sales at Less Than Fair Value:
Silicon Carbide from the People's Republic of China, 59 FR 22585
(May 2, 1994) (``Silicon Carbide'').
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Exporters named in the initiation of an AD administrative review
that do not establish that they are independent of government control
are considered part of the NME entity. In such instances, it has been
the Department's practice to consider the NME entity under review, even
if no request for review was made specifically for the entity.\21\
Under this practice, the assessment rate for entries from exporters
that are part of the NME entity is not determined until the final
results of the review. Thus, the Department typically does not instruct
CBP to liquidate entries for any exporters whose deposits were made at
the rate of the NME entity pending the final results of the
administrative review. As a result, importers with entries from
exporters that are part of the NME entity, but that were not named in
the initiation of the review,
[[Page 65970]]
must nevertheless wait until the final results of review before final
liquidation. However, in most cases, the assessment rate is not
different from the cash deposit rate at the time of entry for such
imports. Consequently, the Department's conditional review practice has
resulted in the delayed liquidation (often over a year after the date
of initiation) of NME entity entries, even though the NME entity rate
is unlikely to change when the NME entity is under review.
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\21\ This practice was affirmed in Transcom, Inc., v. United
States, 294 F.3d 1371 (Fed. Cir. 2002).
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Statement of Practice Regarding Review of the NME Entity
The Department will no longer consider the NME entity as an
exporter conditionally subject to administrative reviews. Accordingly,
the NME entity will not be under review unless the Department
specifically receives a request for, or self-initiates, a review of the
NME entity.\22\ In administrative reviews of AD orders from NME
countries where a review of the NME entity has not been initiated, but
where an individual exporter for which a review was initiated does not
qualify for a separate rate, the Department will issue a final decision
indicating that the company in question is part of the NME entity.
However, in that situation, because no review of the NME entity was
conducted, the NME entity's entries were not subject to the review and
the rate for the-NME entity is not subject to change as a result of
that review (although the rate for the individual exporter may change
as a function of the finding that the exporter is part of the NME
entity).
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\22\ In accordance with 19 CFR 351.213(b)(1), parties should
specify that they are requesting a review of entries from exporters
comprising the entity, and to the extent possible, include the names
of such exporters in their request.
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Following initiation of an administrative review when there is no
review requested of the NME entity, the Department will instruct CBP to
liquidate entries for all exporters not named in the initiation notice,
including those that were suspended at the NME entity rate. This change
in practice will eliminate the unnecessary delay in liquidation of
entries from the NME entity.
Dated: September 30, 2013.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2013-26266 Filed 11-1-13; 8:45 am]
BILLING CODE 3510-DS-P